How AI Will Impact The Clinical Development Svcs Industry - Ahead Of The Curve

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How AI Will Impact The Clinical Development Svcs Industry - Ahead Of The Curve

TD SECURITIES (USA) LLC INDUSTRY UPDATE

June 8, 2026

■Health Care Technology & Distribution: How AI Will Impact The Clinical Development

CROs

Science & Diagnostic Tools: Life Svcs Industry - Ahead Of The Curve■Life

Science Tools

Charles Rhyee THE TD COWEN INSIGHT

646 562 1376

As AI capabilities have rapidly improved over recent months, investors have grown concerned

charles.rhyee@tdsecurities.com

that AI will allow biopharma to significantly reduce its reliance on CROs. Our analysis suggests

Brendan Smith, Ph.D. AI is unlikely to drive targeted cuts to CRO fees and more likely reduces trial timelines and

646 562 1417 increases trial activity. We expect CROs to transition to a higher value, tech-enabled partner to

brendan.smith@tdsecurities.com

biopharma.

Dan Brennan, CFA

646 562 1317 Our Thesis

dan.brennan@tdsecurities.com

In early February, the market rapidly became concerned over the threat that AI presented

Erin McCallister to the CRO industry, which led to a dramatic reduction in terminal values for the group.

646 562 1373 More specifically, investors became increasingly concerned AI technology would lead to

erin.mccallister@tdsecurities.com biopharma internally automating significant portions of CRO services and that CRO internal AI

Lucas Romanski automation would drive a deflationary impact to CRO service fee rates. While aspects of that

646 562 1352 have some merit, we ultimately believe that the reaction in shares (still down on avg. ~16%) to

lucas.romanski@tdsecurities.com the threat of AI has led to a dislocation in the group's valuation. Following discussions with

former senior level biopharma R&D and CRO leaders, and through a proprietary analysis, we

Price Target Changes